Business Owners Should Get Away From PayPal And Move To The Blockchain

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Do you believe that in five years every second transaction in e-commerce will be settled on blockchain? No? Well, that’s what people thought about plastic credit cards versus cash a few decades ago when it came to traditional retail stores.

There is no doubt that Web3 will drastically change the way e-commerce works. Using cryptocurrency payments in e-commerce stores is becoming as common as accepting PayPal, Klarna, Visa or Mastercard. Stores that fail to adapt their ecommerce platforms to accept cryptocurrencies will soon be out of business.

How Web3 Changed the Ecommerce Landscape

Web3’s converging powers — blockchain, decentralized finance (DeFi), AI, and machine learning — allow new, smart algorithms to analyze and adapt to deliver user-centric experiences. In addition, Web3 will be much more comprehensive than previous versions of the Web. The decentralized nature of Web3 creates the perfect platform for the fast and transparent flow of information that is not subject to censorship by a central authority.

In addition, Web3 eliminates middlemen like Facebook who take money (and personal data) from users when they buy something online. At the same time, all details of our transactions are public – for better or for worse. Improving the security and convenience of online transactions will increase the volume of e-commerce transactions and encourage businesses to use crypto payments.

Related: Latin America is ready for crypto – just integrate it with their payment systems

As more businesses move from Web2 to Web3, many merchants and consumers have started using crypto payment solutions.

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In Web2, most online payment platforms such as PayPal and Stripe charge transaction fees of around 4%. This, of course, makes it difficult for companies to remain competitive without raising prices. Not only are crypto payments frictionless, but they are also gaining popularity as a payment method. With today’s stable coins, people no longer have to worry about converting to fiat and the hassle of withdrawing money into their bank accounts.

The power of blockchain in old and new business models

As with the adoption of Web2 e-commerce, there is still a long way to go before Web3 can deliver all of the aforementioned benefits. However, the introduction of smart contracts and Web3 platforms like Hyperledger has drastically changed the landscape of value exchange. Hyperledger Fabric was developed by companies such as IBM for specific business cases that optimize supply chain operations. Access to the ledger using Fabric allows companies to view the same immutable data, ensuring accountability and minimizing the chance of forgery.

Consumers can track the progress of their orders and trace each item back to its origin. At the same time, supply chain operators can monitor inventory levels and shipments, take appropriate action to resolve issues and detect fraud. This allows the consumer and the company to expect delivery at a specific time. All packages can be easily monitored through the blockchain explorer while protecting customer privacy.

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In addition, blockchain allows the creation and ownership of a global whitelist of real or trusted customers and suppliers, something that Unstoppable Domains does with its identity verification for Web3. Such a whitelist reduces false positives and helps detect actual fraud. Unlike traditional ecommerce payments, Web3 allows people to easily place their orders by eliminating middlemen and chargebacks.

A new regulatory environment

The advent of Web3 in e-commerce will change compliance requirements related to personal data, including the European Union’s General Data Protection Regulation, raising important questions such as identity authentication without revealing personal, sensitive information.

However, Web3 developers are already experimenting with using zero-knowledge proofs as a solution to prove to the other party that they possess certain information (such as nationality or age above the limit) without actually revealing the details.

It is not necessarily up to customers to decide how much personal data they are going to give. That will only happen if companies adopt the applicable technology and regulators allow it. However, that cannot happen unless someone is willing to make an argument for it.

Related: PayPal allows transfer of digital currency to external wallets

With such vast capabilities, more companies should consider jumping on the Web3 train. After all, they can increase their transparency, reputation and cost management in the e-commerce game to stay ahead and move digital data securely and freely across borders. For that to happen, clear rules need to be put in place to support the wider adoption of blockchain technology in this space.

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Businesses could also play an important role in the Web3 world, ensuring they are equipped with the latest security solutions to avoid being targeted by cybercriminals. Recent cybercrime cases have resulted in hackers taking money as well as customers’ private personal information, inevitably leading to reputational damage for the organization.

Having the latest tools and systems would mean little without a sufficiently staffed team of information security professionals to ensure that key system vulnerabilities are addressed in a timely manner and that key controls are regularly tested. Web3 companies should definitely devote sufficient resources and attention to addressing these risk areas in their operations.

Raymond Hsu is the co-founder and CEO of Cabital, a cryptocurrency wealth management platform. Before co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions including Citibank, Standard Chartered, eBay and Airwallex.

This article is for general information purposes only and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author only and do not necessarily reflect or represent the views and opinions of TBEN.

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